Benefits and challenges of using social media to profile consumers

A recent consulting assignment prompted me to revisit the findings from a research project that I conducted three years ago, with Moira Clark and Paul Fennemore. We looked at how business-to-consumer organisations were using social media to complement their segmentation efforts. Here is an overview of our findings.

The first part of our study explored how firms used social media to identify and profile customers. We found that companies were enthusiastic about the potential of social media as a source of consumer insight, particularly around consumer behaviour, sentiment towards their brands, and the salience of particular users and topics. As one of our interviewees, representing a transport company, said: Social (media) gives us this data that we would not otherwise get.

Platforms routinely monitored by the firms in our study included the popular micro blogging service Twitter, the social network Facebook, and the video sharing website YouTube. Naturally, firms operating in an international context monitored services popular in those locations, instead, such as Ren-Ren in China. Some firms also screened the social scoring platform Klout and the blogging activity of particular users, namely influencers. A very small number hosted their own virtual communities.

A key perceived advantage of social media was that customers self-segment by joining particular online communities of interest. Self-selection improves accuracy in segmentation, and overcomes one of the key challenges of segmentation: being able to observe key drivers of behaviour. For instance, one financial services firm said: ‘We pick up a lot on forums. There are 415 forums associated with international banking’.

Our interviewees were not worried about the quality of social media data. For instance, one interviewee representing a financial services organisation said: ‘(On social media) people want to genuinely communicate with their friends and therefore have no incentive to lie about who they are’.

Our interviewees felt that data collected via social media platforms complemented information traditionally available in the organisations’ customer relationship management (CRM) systems, and could bring marketers closer to obtaining a single view of customers. However, for many firms there was not, yet, an automatic or seamless integration of CRM and social media data. Instead, social media tended to be added to the CRM system on an ad-hoc basis, for instance, following a complaint.

Integration of CRM and social media data was hindered by organisational issues, as well as legal and ethical considerations concerning data collection and data sharing. There were also issues related to the data sources, including the ability to understand foreign languages or accessing the data. Moreover, there were challenges in matching social media identities with those on the organisation’s existing databases.

Matching social media identities with those on the organisation’s databases

Given the perceived quality of social media data, and their value as a source of consumer insight, firms were exploring ways of dealing with the barriers to fully utilising social media data. For instance, to overcome silos, some firms created dedicated customer insight teams. Others managed legal constraints by explicitly asking their customers for permission to collect and use data regarding their social media presence. To deal with language and cultural barriers, firms enlisted the help of agencies or local partners, and to overcome access issues firms tried to move the conversation off the social media platforms and onto their own channels (e.g. e-mail). Finally, to develop a single view of the customer, firms increasingly asked (and obtained) customers’ social media usernames or, conversely, they asked social media users for their post code or other form of customer identification to cross reference identities. One example was given by this interviewee representing a consumer products’ brand: ‘Users often want help or to be involved or are entering competitions, so there is an incentive to get them to (enter) their correct identity details’.

Explicitly asking customers for permission to collect and use social media data

Language barriers

Use of agencies or local partners

Access to data

Move the conversation off the social media platforms and onto the organisation’s own channels (e.g. e-mail)

Matching social media identities with those on the organisation’s databases

Collect customers’ social media usernames and/or ask social media users for their post code or other form of customer identification to cross reference identities

The full paper is available here. It is paid access, but there is a free version here, too.

Three years later, these challenges persist. New platforms (e.g., Snapchat) mean new challenges for data access and integration, and customer identification. Many organisations have yet to merge key functions to overcome silos and facilitate the integration of internal and social media insight. And three years later, I never had a company ask me permission to use my social media data. Have you?

It’s interesting that you talked about how social networking data can help you learn about previously uncovered areas. I have been wanting start a business, and I was wondering how to find a target audience. I can see how using social data would be helpful, that way I might be able to find new customers.